Andrea Coombes writes the “Ways and Means” column for MarketWatch, a media property of the Wall Street Journal that has nearly 9.5 million unique visitors per month. McManus & Associates Founding Principal and top AV-rated Attorney John McManus recently spoke with Coombes about special considerations for women when it comes to estate planning.
Coombes’ story, “How women can make estate planning easier,” was today published by the news outlet and includes a large section that reflects thoughts shared by McManus on the topic. From MarketWatch:
Women who remarry or those who come to a marriage with significant assets should think carefully about their estate plan before tying the knot.
“We find that women are hesitant to discuss their net worth going into a new relationship, but that puts them in grave danger,” said John O. McManus, founder of McManus & Associates in New York and New Providence, N.J.
“If they keep the assets on their own balance sheet, the good news is, if they divorce, the new spouse won’t have access to that money,” McManus said. While state laws vary, in some cases the assets one brings to a marriage “are not an asset in divorce.”
The bad news, assuming your wishes are otherwise, is that, if you die first, your husband will get one-third of those assets. “By operation of law, your spouse is entitled to a minimum of one third of your assets. Social policy in the U.S. says you cannot disinherit your spouse,” McManus said.
Even if you write a will in which nothing is left to the surviving spouse, “by law, he’s entitled to one third of the assets,” McManus said.
There are a couple of ways to forestall that issue, though none are ideal, he said.
One tactic is to make sure beneficiary designations on retirement plans and the like are set such that your children or other heirs inherit — but those designations need to be in place before you get married. If they are, such designations “will control and overrule the right of election,” McManus said.
But changing beneficiary designations after you get married may be difficult, because some financial-services firms won’t allow changes that entail disinheriting a spouse without the spouse’s consent.
Another solution is to set up a trust, naming a child or other relative as the recipient, and put assets into it before you get married. You can still borrow from the trust, McManus said, but the husband will not have access to that money if you die.
McManus said he’s seen situations where a spouse changed the beneficiary designation on a retirement account to name her husband, rather than a child, with a verbal agreement that the money would go to the child in the event of the husband’s death. But at that point, there’s no way to be sure that will happen when you’re gone.
“Be clear in your head what you want to leave to your children and to your spouse before you get married,” McManus said.
Coombes’ piece goes on to cover the estate planning basics that women should consider putting in place, no matter their ages or how much money they have. The list from the article:
A financial power of attorney, naming the person who will make money decisions for you if you can’t
A health-care power of attorney, naming the person who will make health-care decisions for you if you can’t
A living will specifying your end-of-life wishes
If you have minor children, a will that names a guardian for them
Make sure the beneficiary designations on retirement accounts and life-insurance policies are up-to-date.
Talk to your bank and representatives of your other financial accounts to make sure the titling of those assets suits your situation.
Coombes’ story includes more valuable information, so don’t miss reading it in full. Make your way over to MarketWatch to check it out.
And to take action on the to-do’s recommended by experts in the article, including our firm’s own founder, give us a call at 908-898-0100.